I find it very disappointing that Paypal is hiding behind financial regulations and shows no interest in helping their international users even though they could easily do so. Here are things you could do even if there was a law preventing you from changing countries on accounts: 1. You are asking the users to open a new account. But then they would need to move the funds. You will be charging fees for that transfer. Why don't you offer free transfers between their own (forced to create) accounts? 2. An account may have hundreds of transaction. By closing the old and opening a new account, that reputation is lost. Why don't you let users preserve that reputation on the new (forced) account ? 3. The new account needs to be verified. That both takes time and effort. Since the original account is already validated, why not allow a validated account user an easier way to verify the new (forced) account? 4. The account had data, If the user is forced to close the old account, why not allows a way to access the transaction history of the old account from the new (forced) account? You can see that you are putting your international users in meaningless unnecessary trouble. Surely you can do more to help them out, if you just have the will to do so.
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